The Startup Funding Journey: A Simple Framework for Pitching at Each Stage

The following is a simple framework for understanding how to frame your pitch depending on your stage of startup development. This applies to regular tech startups and not deep tech, which follows a different journey and trajectory through funding.

1. Pre-seed: "Idea Validation"

VCs invest in founders and ideas. Focus areas include team expertise, commitment, market understanding, and early demand signals.

Purpose: Validate concept, develop early prototype, establish problem-solution fit.

Characteristics: Founding team, concept stage, product wireframes/prototypes, friends & family funding.

Key Metrics:

• Market research insights

• Founder credibility

• Prototype/MVP status

• Problem-solution fit evidence

• Customer discovery interviews/surveys

• Website landing page conversions

• Addressable market size estimates

Investor Expectations:

• Evidence of traction: Data showing users value the product

• Strong founding team: Ability to execute, learn, and attract talent

• Clear value proposition: Why customers choose you

• Large addressable market: Reinforce the opportunity

• Defined path to PMF: A credible plan for iterating towards a scalable model

Common Challenges/Red Flags:

• Proving the problem is real

• Finding true PMF vs. false positives

• Incomplete founding team (missing technical or business expertise)

• Unclear unique value proposition

• Lack of domain expertise

• Limited customer discovery/validation

• Weak customer engagement metrics

2. Seed: "Early Promise"

Emphasis shifts to early traction with an MVP. VCs evaluate business model viability, product roadmap, team, and whether customers will pay.

Purpose: Product-market fit validation, early traction development.

Characteristics:

• Functional MVP

• Initial customers/users

• Early signs of traction

• Core team (founders + early hires, often technical/product focused)

• Business model hypothesis being tested

Key Metrics:

• User growth (Weekly/Monthly Active Users - WAU/MAU)

• User engagement (session length, key action completion)

• Early revenue (if applicable)

• Customer acquisition cost (CAC - initial estimates)

• Customer feedback & Net Promoter Score (NPS)

• Churn rate and retention signals

Investor Expectations:

• Evidence of traction: Data showing users value the product

• Clear growth strategy and path to scaling

Common Challenges/Red Flags:

• High customer acquisition costs relative to industry standards

• Weak user retention signals

• Slow development velocity

• Over-optimisation for features rather than core value

• Inability to articulate clear growth strategy

3. Series A: "Product-Market Fit Confirmation"

Evaluation relies more on KPIs (ARR, CAC, LTV, growth rate, churn). VCs assess scalability and long-term profitability, assuming product-market fit.

Purpose: Scale proven product, build foundational team and operations.

Characteristics:

• Crystal clear positioning

• Demonstrated product-market fit

• Repeatable and scalable customer acquisition strategy

• Consistent revenue growth (often tracked as MRR)

• Established key team functions

• Understanding of unit economics

• Clear understanding of market and direction of travel

Key Metrics:

• Proven retention/churn rate

• Revenue run-rate (typically $1M+ ARR)

• CAC/LTV ratio

• Monthly growth percentage

• Sales efficiency metrics

• Gross margin

• Sales cycle length & conversion rates

Common Challenges/Red Flags:

• Customer churn issues

• Slowing growth rate

• High customer concentration (reliance on few major clients)

• Inability to hire or retain key talent

• Unit economics that don't improve with scale

• Weak competitive moat or defensibility

• Sales cycle lengthening

4. Series B: "Growth Acceleration"

Analysis deepens to sustained financial performance, GTM scaling market leadership, profitability metrics, competitive position, and exit plans (IPO/acquisition). Investors seek profitable scaling.

Purpose: Accelerated growth, market expansion, operational scalability.

Characteristics:

• Gross dollar retention

• Rule of 40+

• Positioning: even potential for category leadership

• Proven scalable business

• Substantial revenue (typically $2-5M+ ARR)

• Strong, predictable revenue growth

• International expansion capabilities

• Growing market presence and brand recognition

• Clear path to becoming a category leader

• Strong financial performance

• Competitive moat: Sustainable advantages

• Experienced management team capable of managing complexity

Key Metrics:

• ARR growth rate

• Improved unit economics

• Reduced CAC, expanding LTV

• Churn improvement

• Operational efficiency metrics

• Gross margin and contribution margin improvements

• Profitability metrics (EBITDA, path to net income)

• Market share (estimated)

• International traction (if applicable)

Common Challenges/Red Flags:

• Slowing growth momentum

• Deteriorating unit economics

• Inability to effectively capture or defend market share

• Execution issues in scaling operations or product

• Leadership gaps or inability to manage complexity

• Operational bottlenecks that prevent scaling

• Increased competitive pressure affecting margins